Date: September 21, 2010
Canadian Leading Indicators, August 2010 Results
Source: Statistics Canada
Link to Release: http://www.statcan.gc.ca/daily-quotidien/100922/dq100922b-eng.htm
Summary: The Canadian Composite Index of Leading Indicators generally points to the direction of economic growth two months in advance of Statistics Canada’s Gross Domestic Product (GDP) release. The Index increased by 0.5 per cent in August, up slightly from July’s 0.4 per cent rise. The manufacturing sector continued to show strength overall, driven by 5.2 per cent increase in orders for durable goods. Notable declines were in the housing component of the index, which dipped by four per cent, and housing-related index components such as furniture and appliance sales.
Analysis: The above average economic growth in the fourth quarter of 2009 and first quarter of 2010 was driven to a great degree by home sales and associated housing-related transactions. Record low interest rates spurred a record number of transactions in many metropolitan areas across the country, including the GTA. Consumer spending on large ticket items like homes and related goods and services was the Bank of Canada’s intent when it lowered interest rates. While we are experiencing a balancing out from the extremely strong housing market activity experienced through the first quarter of 2010, the leading indicator suggests that we will continue to see GDP growth reported by Statistics Canada in the second half of the year. This growth, however, will be more the result of private sector business investment, rather than consumer spending and housing investment. GDP growth for the remainder of 2010 will likely be below the long-term average.
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Thursday, September 30, 2010
Canadian Leading Indicators, August 2010 Results
US Existing Home Sales, August 2010
Date: September 23,2010
US Existing Home Sales, August 2010 Results
Source: National Association of REALTORS
Link to Release: http://www.realtor.org/press_room/news_releases/2010/09/ehs_move
Summary: U.S. existing home transactions climbed 7.6 per cent in August to a seasonally adjusted annual rate of 4.13 million sales from July’s upwardly revised figure of 3.84 million. This figure was down 19.0 percent the rate of 5.1 million reported for August of 2009. The median selling price also increased last month – up 0.8 per cent year-over-year to $178,600. Distressed properties continued to account for approximately one-third of total sales.
Analysis: Record low interest rates coupled with the median selling price wellbelow pre-recession levels has presented very affordable home ownership opportunity for many households in the US. Unfortunately, even with the positive affordability picture, many households are not confident in their ability to purchase and pay for a home over the long term. This lack of consumer confidence has been reinforced recently by a number of less-than-stellar economic releases. This is why, even with strong month-over-month growth in transactions, the annual rate of sales remains well below annual totals reported for 2009, 2008 and 2007. The median selling price has remained flat due to high inventory levels relative to sales and a high proportion of distressed properties that generally sell at a discount to similar non-distressed homes.
Canadian Retail Sales, July 2010 Release
Date: September 21, 2010
Canadian Retail Sales, July 2010 Release
Source: Statistics Canada
Link to Release: http://www.statcan.gc.ca/daily-quotidien/100922/dq100922a-eng.htm
Summary: The dollar value of retail sales fell 0.1 per cent in July after increasing 0.1 per cent in June. Five of the eleven major retail sub-sectors experienced declines. Declines in sales for housing-related goods were notable, with an 8.4 per cent dip in sales at furniture and home furnishing stores and the value of building and garden materials sales was down 2.3 percent. Regionally, Ontario experienced a 0.3 per cent drop in the value of sales, and BC a decline of 0.4 per cent.
Analysis: Retail sales generally exhibit some volatility on a month-over-month basis. Sales remain well-above last year’s levels in Canada and Ontario, but the annual growth rate in retail sales has edged lower. Economic recovery was initially driven by consumer spending spurred on by low borrowing costs. Home sales were a key driver in this regard, which in turn drove a substantial amount of retail spending. As interest rates have started to rise, it makes sense that growth in some consumer-driven sectors has slowed. Because personal expenditure has historically accounted for approximately two-thirds of Canadian Gross Domestic Product (GDP), it makes sense that GDP growth is expected to be more subdued moving forward.